LONDON: The shipping industry is looking for ways to return to faster expansion in volumes as the slowdown in volume growth since the financial crisis focussed the industry’s thoughts on potential barriers to healthy long-term trade growth, according to Clarksons.
From 1988 to 2008, growth in world seaborne trade averaged an estimated 4.2% pa, a fairly robust level underpinning long-term demand for ships. The markets at times felt the impact of oversupply but sustained weakness of demand growth wasn’t generally the problem.
However, since 2009, the growth rate has slowed, averaging 3.2%, and just 2.8% since 2013. This still equates to significant additional volumes – 1.8% growth in 2015 added 194 million tons – but it’s still enough to get market players worrying, Clarksons said.
The current cycle certainly feels like it has dragged on as it’s now more than eight years since the onset of the financial crisis, Clarksons noted.
However, there are interesting historical comparisons. Between 1929 (the year of the Wall Street Crash) and 1932, the value of global trade dropped by 62% and didn’t get back to the same level until the post-war years.
Six months ago, Clarksons reported that seaborne trade appeared to be showing a pick-up and this time round things are still looking positive.
The 3-month moving average shows a generally upward trend since autumn 2015 with an average of 4% in the second half of 2016, hinting that the bottom of the demand cycle may finally have been passed. The current projection for overall seaborne trade in 2017 is still less than 3% with plenty of scenarios possible, but both market sentiment and the momentum right now feel a little more positive than that.
While it’s quite right to try to assess the range of factors which appear to be lining up against a return to more robust levels of trade growth, it’s also far from incorrect to look for signs of a turn in the trend.